Fosun’s Core Businesses Grow Significantly, Nomura Reiterates "Overweight" Rating

The growth momentum is especially strong at Fosun Tourism Group. Nomura, therefore, maintains an "overweight" rating on Fosun International.

Nomura pointed out that Fosun's four core subsidiaries, namely Yuyuan, Fosun Pharma, Fosun Insurance Portugal and Fosun Tourism Group together contributed 72% of the Group's revenue. The revenue from the four core businesses increased by 8%, which was mainly attributable to the growth in Yuyuan's jewelry and gold business and the outstanding performance of Club Med and Atlantis Sanya under Fosun Tourism Group. The growth drove the Company's steady revenue growth.

Nomura believes that consumption has shown a clear sign of recovery. The tourism sector, in particular, has outstanding performance. Globally, Club Med broke a record in 2023 by recording a business volume of RMB15.1 billion, which represented an increase of 19.2% over 2022 and is equivalent to 118.3% of the business volume achieved for the same period in 2019. Atlantis Sanya also recorded equally strong momentum for recovery with its business volume surging by 90.9% year-on-year to RMB1.7 billion in 2023. The average occupancy rate at Atlantis Sanya was maintained at a high level of 81.9% in 2023 through a series of industry-driven international and diverse activities such as "Night Tour Experience", "Super Summer", and "China's Mermaid Open Tournament". For the first two months of 2024, Atlantis Sanya recorded a year-on-year increase of 16.5% in business volume to approximately RMB500 million and an average occupancy rate of 94.8% as it benefitted from surges in demand during the New Year and the Chinese New Year holidays.

The recovery in consumption also spilt over into other sectors. In 2023, Yuyuan's restaurant chain business accelerated its expansion, with the number of Songhelou Noodle Restaurant increased to 173 nationwide. Meanwhile, the Hangzhou-Shaoxing-Taizhou Railway has been put into operation for two years, and has been run safely and in an orderly manner, transporting a cumulative total of over 20 million passengers.

Nomura sets a price target of HK$5.59 for Fosun International with 19.85% upside, and maintains an "overweight" rating on the Company based on the good development of its business.

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